How The US Infrastructure Bill Might Change Crypto As We Know It

Last week, the US Senate passed the Biden administration's $1 trillion dollar infrastructure bill, a significant hurdle that needed to be crossed on the way to its implementation. Only the House of Representatives debates now stand on the bill's path to Biden's Oval Office desk for signing off.

With the bill's implementation now more a question of when and not if, the crypto community is worried because tucked away in the bill are not-so-crypto-friendly regulatory propositions. In an effort to raise about $28 billion in taxes from cryptocurrency over the next 10 years, the bill proposes stricter tax-reporting requirements for the cryptocurrency industry. Crypto enthusiasts opposing the proposition are saying they do not necessarily have a problem with the tax collection efforts themselves but rather with how the bill broadly defines the term "broker". Here is the actual section from the bill:

RETURN REQUIREMENT FOR CERTAIN TRANSFERS OF DIGITAL ASSETS NOT OTHERWISE SUBJECT TO REPORTING — Any broker, with respect to any transfer (which is not part of a sale or exchange executed by such broker) during a calendar year of a covered security which is a digital asset from an account maintained by such broker to an account which is not maintained by, or an address not associated with, a person that such broker knows or has reason to know is also a broker, shall make a return for such calendar year, in such form as determined by the Secretary, showing the information otherwise required to be furnished with respect to transfers subject to subsection (a).’’

Here is the definition of a crypto "broker" according to the bill:

 “any person who (for consideration) regularly provides any service responsible for effectuating transfers of digital assets, including any decentralized exchange or peer-to-peer marketplace.”

The wording of the bill makes it clear that cryptocurrency brokers should report any transfer of digital assets which will allow the IRS to easily tax someone after they sell a digital asset.  Broker in the bill wording context seems to include anyone involved in the crypto value chain, from node operators to node validators to actual coin miners who, because of the way blockchain, the driving technology behind most crypto coins, works, simply do not have access to user data that the IRS will be looking to use to collect taxes. This, crypto enthusiasts say, unfairly puts tax reporting obligations on crypto elements like miners and software developers which in turn could stifle their innovation.

Despite much lobbying and protesting from high-profile crypto enthusiasts like Twitter CEO Jack Dorsey, the section was not changed and was passed forward to the House as part of the infrastructure bill where there is one more chance to change the bill's wording. Should the bill also pass at the House, so will this rather vague provision which will completely change the crypto landscape.

The cryptocurrency community views this move as government "coming" for the industry which, they say, has been inevitable considering the fact that crypto by way of design diminishes the power of the government and other powerful institutions like banks, etc. It would appear that in this supposed battle between crypto and government, the latter has just one-upped the former. Your move now, crypto.

Comments

  1. Crypto is evolving and upcoming era is only digital currency. If we start buying mining hardware and dig crypto then in upcoming decade we will be survive at top.

    ReplyDelete

Post a Comment

ADVERTISEMENT

Popular Posts